[February 14, 2013]

A.M. Best Requests Comments on Draft Criteria: Universal BCAR, BCAR for P/C Insurers and BCAR for Canadian P/C Insurers

A.M. Best Co. is requesting comments from market participants in the insurance industry and other interested parties on the following draft criteria reports:

-- "Understanding Universal BCAR" (updates version dated August 23, 2012)
-- "Understanding BCAR for Property/Casualty Insurers" (updates version dated May 2, 2012)
-- "Understanding BCAR for Canadian Property/Casualty Insurers" (updates version dated August 23, 2012)

Proposed edits to the draft criteria report, "Understanding Universal BCAR," include asset risk charges that can vary by country, a change in the discount rate assumption used to present value non-life loss and loss-adjustment expense reserves from 5% to 4% and a description of typical items that are included in off balance sheet risk.

The draft criteria report, "Understanding BCAR for Property/Casualty Insurers," includes changes to reflect the annual update to growth charges and the inclusionof pension plans and other post-employment benefit plans as additional off balance sheet items in the business risk component. In addition, the discount rate used to present value loss and loss adjustment reserves was changed from 5% to 4%, and the treatment of foreign investments was included.

The draft criteria report, "Understanding BCAR for Canadian Property/Casualty Insurers," includes the potential for higher asset risk charges for foreign investments, a change in the discount rate assumption used to present value loss and loss adjustment expense reserves from 5% to 4% and a description of typical items that are included in off balance sheet risk.

These updates are part of A.M. Best's continual review of its rating methodology and are not expected to affect the vast majority of A.M. Best's ratings.

Visit www.ambest.com/ratings/methodology to download a PDF copy of each report.

Written comments should be submitted by email to rating.methodology@ambest.com no later than March 14, 2013.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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